1. Foundations of Strategy Chapter 3: Resources and Capabilities
Brooks Garner, Alex Mills, Grayson Watson
10:00am
Team 4
Ford Motor Company

2. Resourced-Based View of the Firm
Resources and capabilities are the principal basis of strategy
Market-based strategies are no longer viable
Products die, capabilities can endure
Honda engines
Canon lenses, microelectronics
Kodak failure

3. Resources Tangible Intangible Human
Resources are not productive without Core Capabilities of a firm.
Deploying resources in a way the firm is most capable to produce a profit.

4. Tangible Resources Easiest to identify and evaluate
Financial resources and physical assets
Great to compare to other companies in similar industries
Includes things like cash, equipment, land and borrowing capacity

5. Ford
Toyota
2,840,000

6. Intangible Resources
Technology- Ford Sync, BLIS (Blind Spot Information System with Cross- traffic assist), Lane keeping system, Pre-Collision assist with automatic emergency braking, park assist, auto high-beam headlights, and many more. Reputation- Customer focused, wide variety, affordable. Culture- Aim to achieve consistency and synergy world-wide. Foster Functional and Technical Excellence, Own working together, role model Ford values, and Deliver results.

7. Human Resources Ford Labor Relations saved the company
In 2006 Ford met with UAW
Worked out a deal that incorporated voluntary buyouts instead of involuntary downsizing, brand restructuring
ONE Ford Plan
One Team, One Plan, One Goal
Restructured the company
Refocused on employees and maximizing resources and capabilities

9. Human Resources Charts
Labor Market Share
Number of Employees by Region
Number of Employees

10. Organizational Capabilities
Firm’s ability to deploy resources for a desired end result.
Functional Analysis
Value Chain Analysis
2015 Ford Motor Company Resources and Capabilities

11. Porter’s Value Chain Breaks the value chain down further
Allows resources to be tied to specific links in the value chain

12. Appraising Resources and Capabilities
What is the strategic importance of different resources and capabilities?
Potential to generate substantial streams of profit.
Based on 3 factors:
Establishing Competitive Advantage
Sustaining Competitive Advantage
Appropriating the Returns to Competitive Advantage

13. Establishing Competitive Advantage
Scarcity- if a resource is widely available within an industry, it may be necessary to compete, but NOT be a sufficient basis for competitive advantage. Relevance- A resource or capability must be relevant to the KSF’s in the market.

14. Sustaining Competitive Advantage
Competitive advantage tends to diminish over time, here is how to sustain it. Durability- the more durable a resource is, the greater ability to support competitive advantage in the long run. Transferability- resources that can be bought and sold easily. ex. Finance, raw materials, components, machines produced by equipment suppliers, and employees with generic skills. Replicability- If a firm can’t by a resource or capability, it must build it. Most new products are easy to replicate.

15. Appropriating the Returns to Competitive Advantage
Who gains the returns generated by superior resources and capabilities?
The owner, but hard to determine.
Employees provide skill and effort
The Firm provides the processes and culture

16. Appraising the Relative Strength of a Firm’s Resources and Capabilities
Most organizations tend to focus on past glories, hopes for the future, and wishful thinking. Leads to hubris- over confidence or pride in something. Hubris for your business or resources and capabilities most always leads to the self destruction of your business. Benchmarking- comparing your business to your competitors and seeing how you line up with them.

17. Ford Obtaining and Sustaining Competitive Advantage
Science is they key to make bets for the future and to make cars and come up with new technology to meet everyone’s needs and to help conserve the planet by going green, or coming up with more solutions to cut down on emissions.
Ford Focus EV- new electric car.
2011 Ford Explorer with the EcoBoost Engine improves fuel efficiency by 25%.

18. Exploiting Key Strengths
Ensure firm’s critical strengths are deployed to the greatest effect
Core Competence
If few unique key strengths adopt niche strategy
Ex. Harley Strategy

19. Managing Key Weaknesses
Converting weakness into strength is likely a long term task
A company is usually stuck with a set amount of resources and capabilities
Often the most successful solution- Outsource
Vertical integration is a structure where a company owns the entire supply chain for its product

20. Superfluous Strengths
Particular strengths that don’t appear to be important for competitive advantage
Two Options
1. Lower the level of investment into these
2. Turn into Key Strategy differentiators

21. Appraising Resources and Capabilities

22. Choosing the Industry Context
Choice of industry context is a matter of judgement
Best to use very broad industry context
Strategy
Sustainable Competitive Advantage
Capabilities
Recourses

23. Ford’s Key Strengths Strong brand image Global supply chain
Pickup Truck F-Series

24. The best-selling trucks in the United States in 2018 (in units)

25. Key Weaknesses Limited global scope of production network
2. Higher costs compared to competitors
3. Slow innovation processes

26. Leading car brands in the United States in 2017, based on vehicle sales (in units)

27. Leading motor vehicle manufacturers worldwide in 2017, based on global sales (in million units)

28. Chapter Summary
Focus has been shifted from external to internal environment of the firm
Internal environment focuses on what the firm can do
Comprised of scanning the firm and seeing how resources combine to create capabilities
Main goal is to establish a competitive advantage